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Frequently Asked Questions
1: What’s the first thing I need to know when working with manufacturers in China? First thing is to recognize that things are done differently in China. Expect to work through differences, not instant success. Be open-minded. 2: There are tons of manufacturers in China on the internet. Which ones are good? Unfortunately, you can not always tell by their web site or ads on the internet. Some B2B sites claim to have certified their members or advertisers but it is still your reasonability to decide which Chinese manufacturer you are going to use. Many times, it’s the one that pays the most advertising dollars shows up first or as preferred factories. So, be patient and look beyond the first page. Some criteria to judge a manufacturer in China are:
3: I already found manufacturers in China on line. What’s my next step? If you have located contacts in China for manufacturers, send them email or faxes first to introduce yourself and tell them what products interest you. In general, Chinese manufacturers are not good with English, with speaking being the worst and reading being the strongest. So, sending something in writing is advisable. Attach a picture or a short video clip (watch out for your file size) to illustrate your idea is a good idea as pictures are worth a thousand words. 4: What about going to trade shows in China? Would that give me better results? Meeting Chinese manufacturers at trade shows is a good way to source, if you have the time and budget. The same challenges exist, though, as you can not be 100% sure that the person you meet at trade shows is indeed the person in charge or even actually makes the product you see. Many independent salesmen will have “association” with an export company which seems to be big and reputable. They may even carry a company business card. But, the company really isn’t liable if anything promised by the salesperson isn’t kept. Go through the process of qualifying just as you would when you find someone on line. 5: China Factory already quoted me the prices, but now I am ready to place orders and they said the prices have to be increased due to exchange rate. What does that mean? In China, exporting factories have all their costs in RMB (the official currency in China). When they quote you FOB China pricing, they convert the pricing to US$ so you can pay in US dollars. You can not buy in RMB as all exports must have foreign currency remitted back to China. So, say, the exchange rate is 1:6.62 (US$ : RMB) today and they quote you US$1.00 per piece, which is RMB 6.62. In two weeks, the exchange becomes 1:6.5, which means they will have to get US$ 1.018 in order to get the same RMB 6.62. 6: I have baby products made in China and factory already quoted me a price. Now they want me to pay for testing fees. Is that fair? Factories in China generally do not include testing fee, audit fees, etc. that are not directly related to the manufacturing of the product. Also, depending on how you classify the product and which country it is shipped to, the testing requirements might be different and different labs have different fee schedule. So, it is fair to have testing fees added. But, you may ask them to include the testing fees upfront when you ask for a quote. 7: What if the product did not pass the test? Do I pay for repeat testing until it passes? If you designate material and production process and the failure has something to do with your design, then it might be reasonable for you to pay repeat testing fees as the China factory chips in the effort of improving. But, if it’s their product and they had promised to use a qualified material, say, a lead-free material, then it is not reasonable to ask the customer to pay again. Of course, in business, everything is negotiable. You just need to be thorough when asking questions. 8: The China factories I have contacted all claim to have been selling to the U.S. Why are they not familiar with all the safety requirements for the U.S. market? It will be expected that they know all the safety requirements but it is really not a reality. Most China factories rely on their customers to tell them what standards to meet and what tests to perform. But, if they happen to be dealing with people that do not care so much, then they would not have learned the valuable information. The best is still for you to tell the China factories what you expect and have them confirm back they can meet all of them. It’ll be nice if you can depend on the factories but it’s really risky to expect a factory in China to be fully familiar with all the laws and regulations in foreign countries. 9: I am selling my products to chain stores that require factory audits. My China factory went through the audit but they must fix a few things in order to pass. They are asking me to pay a fee to get these issues fixed. Is this normal? Many companies now do audits with overseas manufacturers. It is common that factories do not pass in the first round and must do a few changes in order to be qualified. It is time-consuming and costly for factories so it is also common for them to ask you to bear certain costs, if none of their customers have such audit needs. Since this audit success will help their business, the fee can be on a shared basis. Or, it is the best that you find factories that can pass audit, or, have passed audits by some big name companies. 10: OK. I have several China factories quoted me prices. Which one should I choose? The same Chinese manufacturers may not perform the same when dealing with different customers. This seems to be hard to believe but it’s the general truth. The main reasons are:
The list goes on. So, the best way to determine which one to use is to get samples for approval so you can be sure you are comparing apples to apples. 11: I have sketches of what I want the product to look like and descriptions of the function. Is it enough for China manufacturers? Factories in China are usually quite good copying a working prototype or following detailed drawings which include size, shape, colors, tolerances, etc. But, they are not very good with English descriptions without illustrations and, if there are things left to imagination for China factories, then you could be looking at a very lengthy and frustrating process. It might be worthwhile to have a prototype made in the U.S. first, then send it over to be copied by the manufacturers in China. Make sure you express clearly upfront if you do not want your prototype destroyed or need it to be returned. Many factories in China would need to tear the prototype apart in order to make a counter sample or to quote accurate prices. 12: I want to have samples made. Is it normal for factories to charge me for samples, sometimes a lot more than the unit price they quoted me? It truly depends on the type of products to be made at the China factory. If it involves special material, shape or components that are not easily available in the China open market, then it is very likely factory would want to charge for their effort. In almost all cases for first-time customer, whether the sample is free of not, you will be asked to pay for the international courier fee, or, to give them your account so they can send the samples on “freight collect” terms. 13: Several Chinese manufacturers sent me samples and they all look good, but not exactly the same, even though I asked for the same thing. Why? Material available in each China regions may be different. Technologies of manufacturing could be different, thus, the samples might come out differently. China factories generally will not be making a sample exactly to your specification unless you have an order with them or pay some tooling/development charge up front. 14: I am ready to order. What do I need to know about purchasing? When you manufacture in China, it’s better to be as specific as you can. For example, instead of saying “Color: red”, use “Color: Red per Pantone # 199C”. Delivery could mean EX Factory or delivered to your door dates. Be very specific. The same with payment terms and quality standards. 15: What are the common payment terms when having products made in China? Letter of Credit (L/C) is usually acceptable but it could be costly for small orders. Factory may ask for 30-50% deposit upfront with the balance paid before they make the final shipment. You may wire transfer (W/T or Tele-transfer, T/T) the money. Company checks or personal checks are not easily cashable overseas so they are generally NOT accepted by manufacturers in China. You may use bank drafts but it’s troublesome for China factories so they are not preferred. Asking for terms at the beginning usually indicates financial weakness in Chinese factories’ point of view and not very welcome. 16: Do I need to be a big company or very wealthy to consider having products made in China? Since the made-in-China goods will be paid up way before you sell them and be able to collect money from your customers, it is very important that you have sufficient funds to support your overseas manufacturing, import expenses and your own overhead, plus sales and marketing fees you need for the product launch. You do not have to be a big company but you do need to have big enough market to justify the effort of making products in China. 17: Do I need an inspection agency to look over my shipment? You can. But, remember, inspection can only be done randomly and it is not possible to expect your inspection agency to look through the shipment 100%. And, they usually just spot problems but you still need to solve the problem with the China factory that is making your products. 18: How do I make sure my designs are not copied? Filing a patent and indicate on the product that it is protect by patent is good, but it does not provide you 100% protection. Once your product hits the market, there is no true guarantee unless you are willing to spend a lot of money and effort catching everyone who attempts to make the same or similar product. You may sign an NDA (Non-Disclosure Agreement) with the China factory but should be aware that the legal system in China is quite different and may not give you the same protection you expect. The best way is to deal with a company who is experienced with manufacturing in China and importing, preferably with capabilities of local supervision and the muscle of giving factory significant business to keep the factory loyal. Click here for referrals. 19: Who can handle my shipping? Depending on the timing, size, weight, you have various shipping methods to choose from. Generally, ocean shipment is the cheapest for products manufactured in China but it may not be cost-effective if you have very small shipment or that you have urgent deliveries. You should talk to several forwarders to compare prices and deliveries. Preferably, try to work with forwarders that have experiences with, or, specialize in products manufactured in China to be imported into the U.S. There are different routes to get from Point A to Point B and you need to make sure you are comparing all aspects and not just prices. 20: How reliable is the delivery date given by the factory in China? Usually, factory can only control their own production and be responsible for production delays. (Unfortunately, some Chinese factories don’t even do that.) But, it is impossible for manufacturers in China to be responsible for international shipping or custom clearance delays. So, if you are handling importing yourself, you need to watch every step of the way to make sure your delivery is going to be on time. Watch out for long holidays in China (Labor Day, National Day and Chinese New Year at the most important ones) and in the U.S. for possible delays. U.S. Customs often pull shipments out for random X-Ray inspection as well and that’s beyond anyone’s control. 21: How do I determine import duty rate? It’s the U.S. Customs that make the final ruling on duty rate for any product that is manufactured overseas, including China, but you can check with any custom broker just to get a general idea. You can also send a product to the U.S. Customs to get a ruling in writing, if you have any doubts. 22: Should I visit China in order to have things manufactured in China? It’s not a bad idea if you have the time and budget for it. Seeing the place that actually manufactures your products helps. China could be fun to visit, too. But, like all overseas travels, plan extra time for transportations, getting over jetlags and any contingencies. 23: Do I need to speak Chinese in order to get manufacturing done in China? Most China factories will have someone who can speak English to handle Exports but it’s a good idea to always reconfirm what you think you heard. When you show an interest in the Chinese language and respect for the cultural differences, it always helps to build up relationships and that the people that manufacture for you also like you. The rule of thumb is… when in doubt, ask nicely! 24: The samples look good but when my shipment arrives, they look totally different. What do I do? Generally speaking, one or two pieces samples are made by sample rooms, or from previous shipments, not in production lines. The shipment is manufactured per order. Therefore, the chance of having some variations is very high. The best way is to ask for a TOP (top of production) sample AFTER material has been purchased for the mass production and factories in China are ready for mass production. Tell them you will approve mass production after TOP is approved. This way, you can detect problems if there are in the molds, cutting dies, colors, etc. BEFORE the entire lot is finished in China. One extra insurance is to get a shipping sample pulled from the finished lot. You can tell factories that you will only allow shipment after the shipping sample is approved. This way, you will not have surprises when the goods arrive in the States. You may have to incur some courier charges for these samples but they are well worth the money. Remember, when you have products manufactured a few thousand miles away, it does pay to see what you are getting before you actually get them! Also allow some extra time for sending samples back and forth from China to the U.S. 25: My China factory is constantly having delivery delays. They say because I did not approve quickly enough and that they needed time to make changes per my comments. How do I prevent this delay? It is a VERY common problem that products made in China are delayed. The best way is not to place orders until you have an approval sample meeting all your requirements. Running changes make delays. If you are truly inflexible in shipping time, then be prepared to be flexible for minor discrepancies. 26: I am totally unhappy about what I got in the shipment and want to have refunds. I have paid up 100%. What recourses do I have? There isn’t much. Most China factories may accept replacement at a discounted price, or, free credit towards future orders to be deducted, possibly a small portion at a time. Having cash refund is not easily achieved as it’s usually not a black-and-white case. Chinese government also has strict control of foreign currencies and it is very troublesome to send US dollars out of China without a complicated and possibly lengthy process. That’s why it’s very important to deal with someone reputable. Please click here to connect to Liberty Global Group who has been helping customers do direct importing since 1987. 27: If manufacturing in China is so risky, why do people do it all the time? Mostly… for saving money. If you are manufacturing large quantity, the saving could be significant when comparing to domestic manufacturing costs. If you have small quantities, then you need to be prepared to either compromise on certain specifications or paying higher prices. Achieving the right balance is the key to success when manufacturing overseas. Some products are no longer made in the U.S. as they are too labor-intensive.
28: What’s the pros and cons of working directly with factories in China
vs. using a sourcing/import agent in the U.S.? Sometimes, due to the experience and working relationship, an agent could get you lower prices from manufacturers in China. The key is to compare the TOTAL cost (factory cost + import logistic expenses + potential trouble handling expenses+ risk factor) and consider all aspects. 29: I like the savings but NOT the risks. What can I do? By hiring someone like Liberty Global Group, you can minimize the risk of manufacturing in China while cashing in the savings. Liberty Global Group, with headquarters in California, gives you U.S. style warranty while its 7 offices in the Greater China region visits China factories on site and supervise your production in China until the shipment arrives at your designated location. Have other questions not listed here? Send in your questions and we will share our 20+ year experience with you by email. Submit questions.
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